Problem 1: Multi-Step Income Statement: (15 points)
Bridger Science Corp., wants you to prepare their 2020 year-end Income Statement. Some of the year-end adjusted general ledger account amounts are shown below.
(All G/L accounts have normal balances.)
Cash $ 120,000
Loss on Sale of Equipment XXXXXXXXXX25,000
Cost of goods sold 900,000
Cash dividends declared 50,000
Accounts Receivable XXXXXXXXXX65,000
Interest Expense XXXXXXXXXX20,000
Sales revenue 1,300,000
Inventory XXXXXXXXXX300,000
Selling Expenses XXXXXXXXXX90,000
Administrative Expenses XXXXXXXXXX60,000
Accounts Payable XXXXXXXXXX26,000
Common Stock XXXXXXXXXX500,000
Additional Information:
-Their combined Federal and Montana Corporate tax rate is 30%
- The weighted average # of common shares outstanding was 10,000 shares.
Instructions: On the Following Page
A) Prepare only a multi-step income statement for 2020 in good form:
Note regarding formatting. You may choose to use only one column or both if you wish. All line items with amounts should have descriptive terminology.
Bridger Science Corporation
Income Statement
For the Year Ended December 31, 2020
Problem 2: Disposal Exchange of Equipment (10 points)
· Martel Company trades an old truck (cost $120,000 less $72,000 accumulated depreciation) for a newer truck from another contractor.
· Martel also received $68,000 cash in the trade from the other contractor.
· Martel’s old truck has a fair market value of $75,000.
·
· Required:
· Prepare the journal entry to record the exchange of assets by Martel Company. (show any calculations made in the space below)
Accounts XXXXXXXXXXDebit XXXXXXXXXXCredit